Phibro Animal Health Corporation Reports Second Quarter Results
Phibro Animal Health Corporation (NASDAQ:PAHC) reported its second-quarter financial results for the period ending December 31, 2020. Net sales reached $206 million, down 4% from the previous year, while net income improved to $13 million, an 8% increase. Diluted EPS increased by 10% to $0.32. The company noted challenges in international demand, particularly in China and Latin America. Despite sales declines, gross profit slightly improved. For Q3 2021, Phibro projects net sales between $205-208 million and net income of $11-12 million.
- Net income increased 8% to $13 million.
- Diluted EPS rose by 10% to $0.32.
- Gross margin improved to 33.1%, up 80 basis points.
- Selling, general and administrative expenses decreased by 2%.
- Net sales declined $8 million, or 4%, year-over-year.
- Animal Health segment sales decreased by $7.5 million, or 5%.
- Lower international demand impacted sales, particularly from China and Latin America.
Phibro Animal Health Corporation (NASDAQ:PAHC) today announced financial results for its second quarter ended December 31, 2020.
Highlights for the December 31, 2020 quarter (compared to the quarter ended December 31, 2019)
-
Net sales of
$206 million , a decrease of$8 million , or4% -
Net income of
$13 million , an increase of$1 million , or8% -
Diluted EPS of
$0.32 , an increase of$0.03 , or10% . -
Adjusted EBITDA of
$29 million , comparable to the prior year -
Adjusted Net Income of
$14 million , comparable to the prior year -
Adjusted diluted EPS of
$0.34 , comparable to the prior year
COMMENTARY
“Our financial results for the quarter ended December 31, 2020 were strong. Although sales declined, profitability improved in comparison to the same quarter last year,” said Jack Bendheim, Phibro’s Chairman, President and Chief Executive Officer. Jack continued, “We are encouraged by signs the industry is stabilizing, despite the continued pandemic, and we continue to invest in the future in both our production and pet business. We recently announced an upgrade of our Omaha mineral nutrition plant and development continues on two early-stage opportunities in our pet business. We are cautiously optimistic about the near term and, as detailed in our updated guidance, are projecting solid third quarter financial results.”
QUARTERLY RESULTS
Net sales
Net sales of
Animal Health
Net sales of
Mineral Nutrition
Net sales of
Performance Products
Net sales of
Gross profit
Gross profit of
Animal Health gross profit decreased
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) of
Animal Health SG&A decreased
Interest expense, net
Interest expense, net of
Foreign currency (gains) losses, net
Foreign currency losses, net for the three months ended December 31, 2020, were
Provision for income taxes
The provision for income taxes was
Net income
Net income of
Adjusted EBITDA
Adjusted EBITDA of
Adjusted provision for income taxes
The adjusted effective income tax rates for the three months ended December 31, 2020 and 2019, were
Adjusted Net Income
Adjusted net income was
Adjusted diluted EPS
Adjusted diluted EPS was
BALANCE SHEET AND CASH FLOWS
-
3.6x leverage ratio as of December 31, 2020
-$387 million total debt
-$107 million Adjusted EBITDA, for the twelve months ended December 31, 2020 -
$96 million cash and short-term investments on hand and$69 million of available revolving credit as of December 31, 2020 -
$19 million of cash provided before financing for the quarter ended December 31, 2020
FINANCIAL GUIDANCE
Our expected financial results for the three months ending March 31, 2021 are:
-
Net sales of approximately
$205 - 208 million -
Net income of approximately
$11 - 12 million -
Diluted EPS of approximately
$0.27 -$0.30 -
Adjusted EBITDA of approximately
$27 - 29 million -
Adjusted Net Income of approximately
$12 – 13.5 million -
Adjusted diluted EPS of approximately
$0.30 -$0.33
Although there are signs that the Animal Health industry is stabilizing, we continue to forecast only near-term expectations given the uncertainty of the future course of the COVID-19 pandemic and the potential for demand and production disruptions.
WEBCAST & CONFERENCE CALL DETAILS
Phibro Animal Health Corporation will host a webcast and conference call during which the company will review its financial results and respond to questions.
Date: |
Thursday, February 4, 2021 |
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Time: |
9:00 AM Eastern |
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Location: |
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U.S. Toll-Free: |
+1 (833) 968-1955 |
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International Toll: |
+1 (647) 689-6656 |
||||
Conference ID: |
3288725 |
NOTE: In order to join this conference call, all participants will be required to provide the Conference ID number.
A replay of the webcast will be archived and made available on Phibro’s website.
DISCLOSURE NOTICES
Forward-Looking Statements: This communication contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. These statements are not guarantees of future performance or actions. If one or more of these risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Phibro expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K, including in the sections thereof captioned “Forward-Looking Statements” and “Risk Factors.” These filings and subsequent filings are available online at www.sec.gov, www.pahc.com, or on request from Phibro.
Non-GAAP Financial Information: We use non-GAAP financial measures, such as adjusted EBITDA and adjusted net income, to assess and analyze our operational results and trends and to make financial and operational decisions. Management uses adjusted EBITDA as its primary operating measure. We report adjusted net income to portray the results of our operations prior to considering certain income statement elements. We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this communication should not be considered alternatives to measurements required by GAAP, such as net income, operating income and earnings per share, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this communication and/or our Quarterly Report on Form 10-Q and Annual Report on Form 10-K.
Internet Posting of Information: We routinely post information that may be important to investors in the “Investors” section of our website at www.pahc.com. We encourage investors and potential investors to consult our website regularly for important information about us.
| Phibro Animal Health Corporation | ||||||||||||||||||||||||||||||
| Consolidated Results of Operations | ||||||||||||||||||||||||||||||
Three Months |
|
Six Months |
||||||||||||||||||||||||||||
| For the Periods Ended December 31 |
|
2020 |
|
|
|
2019 |
|
|
Change |
|
|
2020 |
|
|
|
2019 |
|
|
Change |
|||||||||||
(in millions, except per share amounts and percentages) |
||||||||||||||||||||||||||||||
| Net sales | $ |
206.1 |
|
$ |
214.0 |
|
$ |
(7.9 |
) |
(4 |
)% |
$ |
401.3 |
|
$ |
403.7 |
|
$ |
(2.4 |
) |
(1 |
)% |
||||||||
| Cost of goods sold |
|
137.9 |
|
|
144.9 |
|
|
(7.0 |
) |
(5 |
)% |
|
269.0 |
|
|
277.0 |
|
|
(8.0 |
) |
(3 |
)% |
||||||||
| Gross profit |
|
68.3 |
|
|
69.1 |
|
|
(0.8 |
) |
(1 |
)% |
|
132.4 |
|
|
126.8 |
|
|
5.6 |
|
4 |
% |
||||||||
| Selling, general and administrative |
|
48.4 |
|
|
49.5 |
|
|
(1.1 |
) |
(2 |
)% |
|
96.8 |
|
|
97.0 |
|
|
(0.2 |
) |
(0 |
)% |
||||||||
| Operating income |
|
19.9 |
|
|
19.6 |
|
|
0.3 |
|
1 |
% |
|
35.6 |
|
|
29.8 |
|
|
5.8 |
|
20 |
% |
||||||||
| Interest expense, net |
|
3.2 |
|
|
3.4 |
|
|
(0.2 |
) |
(6 |
)% |
|
6.0 |
|
|
6.8 |
|
|
(0.8 |
) |
(11 |
)% |
||||||||
| Foreign currency (gains) losses, net |
|
0.6 |
|
|
(0.7 |
) |
|
1.3 |
|
* |
|
(3.0 |
) |
|
2.5 |
|
|
(5.5 |
) |
* | ||||||||||
| Income before income taxes |
|
16.1 |
|
|
16.9 |
|
|
(0.8 |
) |
(5 |
)% |
|
32.6 |
|
|
20.5 |
|
|
12.1 |
|
59 |
% |
||||||||
| Provision for income taxes |
|
3.3 |
|
|
5.0 |
|
|
(1.8 |
) |
(35 |
)% |
|
7.5 |
|
|
6.1 |
|
|
1.4 |
|
23 |
% |
||||||||
| Net income | $ |
12.8 |
|
$ |
11.9 |
|
$ |
0.9 |
|
8 |
% |
$ |
25.1 |
|
$ |
14.4 |
|
$ |
10.7 |
|
74 |
% |
||||||||
| Net income per share | ||||||||||||||||||||||||||||||
| basic | $ |
0.32 |
|
$ |
0.29 |
|
$ |
0.03 |
|
$ |
0.62 |
|
$ |
0.36 |
|
$ |
0.26 |
|
||||||||||||
| diluted | $ |
0.32 |
|
$ |
0.29 |
|
$ |
0.03 |
|
$ |
0.62 |
|
$ |
0.36 |
|
$ |
0.26 |
|
||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||||||||||||
| basic |
|
40.5 |
|
|
40.5 |
|
|
40.5 |
|
|
40.5 |
|
||||||||||||||||||
| diluted |
|
40.5 |
|
|
40.5 |
|
|
40.5 |
|
|
40.5 |
|
||||||||||||||||||
| Ratio to net sales | ||||||||||||||||||||||||||||||
| Gross profit |
|
33.1 |
% |
|
32.3 |
% |
|
33.0 |
% |
|
31.4 |
% |
||||||||||||||||||
| Selling, general and administrative |
|
23.5 |
% |
|
23.1 |
% |
|
24.1 |
% |
|
24.0 |
% |
||||||||||||||||||
| Operating income |
|
9.6 |
% |
|
9.2 |
% |
|
8.9 |
% |
|
7.4 |
% |
||||||||||||||||||
| Income before income taxes |
|
7.8 |
% |
|
7.9 |
% |
|
8.1 |
% |
|
5.1 |
% |
||||||||||||||||||
| Net income |
|
6.2 |
% |
|
5.6 |
% |
|
6.3 |
% |
|
3.6 |
% |
||||||||||||||||||
| Effective tax rate |
|
20.3 |
% |
|
29.6 |
% |
|
22.9 |
% |
|
29.6 |
% |
||||||||||||||||||
| Amounts and percentages may reflect rounding adjustments | ||||||||||||||||||||||||||||||
| * Calculation not meaningful | ||||||||||||||||||||||||||||||
| Phibro Animal Health Corporation | ||||||||||||||||||||||||||||||
| Segment Net Sales and Adjusted EBITDA | ||||||||||||||||||||||||||||||
Three Months |
|
Twelve Months |
||||||||||||||||||||||||||||
| For the Periods Ended December 31 |
|
2020 |
|
|
|
2019 |
|
|
Change |
|
|
2020 |
|
|
|
2019 |
|
|
Change |
|||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||
| Net Sales | ||||||||||||||||||||||||||||||
| MFAs and other | $ |
81.6 |
|
$ |
92.0 |
|
$ |
(10.4 |
) |
(11 |
)% |
$ |
160.3 |
|
$ |
167.0 |
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FAQ
What were Phibro Animal Health's Q2 2020 net sales results?
Phibro Animal Health reported net sales of $206 million for the second quarter ended December 31, 2020, a decrease of $8 million or 4% from the previous year.
How did Phibro Animal Health's net income change in Q2 2020?
Phibro Animal Health's net income increased by $1 million, or 8%, reaching $13 million for the quarter ended December 31, 2020.
What is the projected net income for Phibro Animal Health in Q3 2021?
Phibro projects net income for Q3 2021 to be approximately $11-12 million.
What was the diluted EPS for Phibro Animal Health in Q2 2020?
The diluted EPS for Phibro Animal Health for the second quarter ended December 31, 2020, was $0.32, reflecting a 10% increase compared to the previous year.
Phibro Animal Health Corporation
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